CGF International Conference, October 8th, 2015 in Istanbul
Applied Corporate Governance
Example – Case Study
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siemens.com
The Siemens Compliance System
The Company
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Page 2
October 8, 2015
Dr. Klaus Moosmayer / CCO
Key figures for fiscal 2014
Siemens at a glance
Revenue by industrial business
(continuing operations; in millions of €,
except where otherwise stated)
FY 2014
FY 2013
% Change1
Orders
78,350
79,755
1%
Revenue
71,920
73,445
1%
Healthcare 16%
Power and Gas 18%
Volume
Process Industries
and Drives 13%
Energy
Management 15%
Profitability and capital efficiency
Return on capital employed (ROCE)
Net
income2
17.2%
13.7%
5,507
4,409
Digital Factory 13%
25%
Mobility 10%
Capital structure and liquidity
Free cash flow
5,378
Sep. 30, 2014
Sep. 30, 2013
343
348
Germany
115
117
Outside Germany
229
231
Employees
Total
Building
Technologies 8%
Not included: Financial Services (SFS)
5,399
(in thousands)
Wind Power and
Renewables 8%
1
Comparable, excluding currency translation and portfolio effects.
2
Continuing and discontinued operations.
Revenue by region
Asia, Australia 20%
Europe, C.I.S.*, Africa,
Middle East (without
Germany) 39%
Americas 26%
Germany 15%
* Commonwealth of Independent States
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October 8, 2015
Dr. Klaus Moosmayer / CCO
Global presence
Close to customers all over the world
Europe, C.I.S.,1 Africa, Middle East
Revenue (in billions of €)2
15% of total worldwide
10.9
115,000
69
(including Germany)
Employees3
33 % of total worldwide
Key production facilities4
24 % of total worldwide
38.7
211,000
139
Germany
Revenue (in billions of €)2
54% of total worldwide
Employees3
62 % of total worldwide
Key production facilities4
48 % of total worldwide
Americas
18.8
70,000
76
Revenue (in billions of
26% of total worldwide
Asia,
Australia
€)2
Employees3
20 % of total worldwide
14.4
62,000
74
Key production facilities4
26 % of total worldwide
All figures refer to continuing operations.
1 Commonwealth of Independent States.
2
By customer location.
3
As of September 30, 2014.
4
Revenue (in billions of €)2
20% of total worldwide
Employees3
18 % of total worldwide
Key production facilities4
26 % of total worldwide
Fifteen employees or more.
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October 8, 2015
Dr. Klaus Moosmayer / CCO
The Siemens Compliance System
The Past
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Page 5
October 8, 2015
Dr. Klaus Moosmayer / CCO
The disaster struck – November 2006 headlines
Possible scenarios
 Debarment from
public tenders
 Penalties up to
€10 billion
 Long-term damage to
reputation and
business
 Break-up of the
company
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October 8, 2015
Dr. Klaus Moosmayer / CCO
Rapid reaction and implementation of our
Compliance System, plus further development
Immediate actions
2006
Implementation
2007
Support sustainable business
2009
2008
 Exchange of Leadership
Team
 Settlement with authorities
in Germany and in the U.S.
 Tone from the top
 Compliance program
 Independent investigation
 Compliance organization
 Centralization of bank
accounts
 Compliance training
 Settlement with World Bank
 Continuous improvement
 Values & integrity
 Collective Action
 Compliance tools
Active development of Compliance System/ external recognition
2010
2011
 First funding round Integrity
Initiative
2012
 End of monitorship
(Dec. 15, 2012);
full implementation of
all recommendations
2013 & 2014
 Second funding round
Integrity Initiative
 Dow Jones Sustainability
Index: highest rating in the
category Compliance for
fourth time in a row
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Page 7
October 8, 2015
Dr. Klaus Moosmayer / CCO
The Siemens Compliance System
Siemens Today
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October 8, 2015
Dr. Klaus Moosmayer / CCO
“Tone from the top” as important internal and
external message
“The culture of a company and its
values make the difference. People
rightly associate Siemens with
reliability, fairness and integrity.”
Joe Kaeser,
President and CEO of Siemens AG
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Page 9
October 8, 2015
Dr. Klaus Moosmayer / CCO
Our Compliance System –
Management responsibility is the focus
We continuously develop the Compliance System further in order to adapt it to changing requirements
according to our global business.
Effective preventive measures
such as risk management,
policies & procedures, training &
communication enable
systematic misconduct to be
avoided
Management
responsibility
Explicit consequences
and clear reactions support
the prevention of misconduct,
for example to punish
wrongdoing and to eliminate
deficiencies
Effective Compliance work
requires complete clarification:
whistle-blowing channels “Tell
us” and ombudsman, as well as
professional and fair
investigations
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October 8, 2015
Dr. Klaus Moosmayer / CCO
The Siemens Compliance Organization –
Clear roles & responsibilities
Direkteconnection
Anbindung an
Direct
to den
the CEO
CEO
Rollenof
des
Compliance Officers
Officers
Roles
Compliance
President and CEO
Joe Kaeser
1)
General Counsel
Situation
Andreas C. Hoffmann
Chief Compliance Officer
Klaus Moosmayer
Tasks
Continuous communication about the importance of
Compliance for Siemens
Company-wide Compliance organization in
Headquarters, Divisions and Regions
1 Direct reporting line to Board of Management and
Bundling of company-wide expertise for avoidance of
corruption and other violations of fair competition, and
regarding data privacy
Governance for investigations and disciplinary response
Supervisory Board re compliance risks and measures.
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October 8, 2015
Dr. Klaus Moosmayer / CCO
Compliance Organization as of October 1, 2014
Efficient setup due to company requirements
Chief Compliance Officer
Regulatory
Strategy & Risk
Data Privacy
Collective Action
Corporate Core,
Global Services,
Financial Services,
Anti-Money
Laundering
Regions
Americas
Asia/Australia
Middle East
Europe, CIS
Africa
Divisions
Power and Gas
Wind Power and
Renewables
Power Generation
Services
Energy
Management
Mobility
Building
Technologies
Digital Factory
Process Industries
and Drives
Financial
Services
Healthcare*
Headquarters
*: “Company within the company” model
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October 8, 2015
Dr. Klaus Moosmayer / CCO
Compliance in global business –
tasks and challenges
Employees
 Dissemination of knowledge
about regulations and
processes
 Attitude and values lived out
in practice
 Role and role-model
function of executives are
decisive factors
►Integrity dialog
Business
Partners
 Business partners as
intermediaries to customers
 Examples:
sales agents, system
integrators, custom agents
Environment
 High risk of corruption in
many countries where
Siemens does business
 Countries with high annual
growth also affected
►Risk-based Compliance
due diligence of all
business partners
►Collective Action
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October 8, 2015
Dr. Klaus Moosmayer / CCO
Our employees –
in dialog on Compliance with their line manager
Integrity dialog in team meetings
 Objectives
 to maintain awareness of Compliance
 to provide a practical demonstration of
management responsibility
 Managers discuss Compliance-related topics
with their teams
 Contents: Risk-based selection of topics with
central and local relevance
 Supported by Compliance Officer
 Global rollout during Fiscal Year 2013
 Repeated on annual basis
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October 8, 2015
Dr. Klaus Moosmayer / CCO
Business partner-related Compliance risks –
uniform risk-assessment of all relationships
The Compliance
Due Diligence
process for
Business Partners

All business partners with an intermediary function between Siemens and the customer must
undergo a risk assessment (uniform across the company and supported by a tool).

Based on certain risk indicators – such as, for example, the risk of corruption in the country of
deployment – a risk class (higher, medium or lower risk) is defined for the business relationship,
which subsequently determines further procedure (Due Diligence, requirement for approval and
mandatory contract clauses).
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October 8, 2015
Dr. Klaus Moosmayer / CCO
Collective Action calls for high Compliance standards
which benefit all market participants
 Fight corruption in concert with
competitors and other players
Customers
Governments
 Create high compliance standards
via a concept of prevention
NGOs 1)
Collective
Action
Society
 Integrate an independent institution
for promotion and monitoring
 Define sanctions in case of
violations
Competitors
1) Non-Governmental Organizations such as Transparency International
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Page 16
October 8, 2015
Dr. Klaus Moosmayer / CCO
We must remain vigilant…
L‘Etat de São Paulo poursuit
Siemens en justice
Bloomberg.com
Siemens Agrees to Pay $10
Million to Settle New York
Fraud Case
Spiegel Online
Versuchte Bestechung in Kuwait:
Siemens deckt neue Korruption auf
As at: January 2014
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Page 17
October 8, 2015
Dr. Klaus Moosmayer / CCO
…and determinedly pursue any cases that arise…
Stipulated standards
 The presumption of innocence applies, employee rights are safeguarded
 Works Council co-determination rights are protected
 Data privacy is observed
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October 8, 2015
Dr. Klaus Moosmayer / CCO
… and continue with the constant development of the
Compliance System
 Compliance has top priority
 Compliance System to support
sustainable growth and create a
competitive advantage
 Risk-based further development of
the Compliance System, in order to
maintain high standards
 High rating and recognition of our
Compliance System in the annual
assessments for the Dow Jones
Sustainability Index: highest rating in
the Compliance category for the 4th time
in a row
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October 8, 2015
Dr. Klaus Moosmayer / CCO
Compliance Priorities
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Page 20
October 8, 2015
Dr. Klaus Moosmayer / CCO
Thank you for your kind attention.
Dr. Klaus Moosmayer
Chief Compliance Officer of Siemens
Siemens AG
St.-Martin-Str. 76
81541 Munich
Germany
Phone: +49 (89) 636-31512
E-mail:
klaus.moosmayer@siemens.com
siemens.com/compliance
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October 8, 2015
Dr. Klaus Moosmayer / CCO